Fun Out of the Sun

With little over a month left in the summer vacation season, outlet center owners — particularly those with properties with high seasonal sales — seem unfazed by potential black marks that could have put a hurt on retail sales.

In spite of inflationary concerns, a weak housing market and rising food and gas prices. The Travel Industry Association of America forecasts approximately 329.6 million people will take trips this summer, a 1.4 percent increase over 324.9 million in 2006.

Sales figures for some of the country's largest outlet operators, many of whose shopping centers are located in resort destinations, are rising. Greensboro, N.C.-based Tanger Factory Outlet Centers, Inc., which operates 30 outlets, and Indianapolis-based Simon Property Group, which operates 36 outlet centers through its Simon Chelsea subsidiary, both reported strong first quarter sales and were bullish on summer spending.

A good summer is critical for outlet center operators since sales during the period can account for up to 80 percent of some centers' annual total, industry experts say. Resort shopping centers have a finite window in which to do the bulk of their business, explains Scott R. Lynn, director/principal with Dallas-based Metropolitan Capital Advisors, Ltd. (MCA), which arranges debt and equity capital for real estate investors and developers.

“If the center is dependent on only one or two seasons [out of the year], the sales have to be extremely strong during those times,” says Jeff Green, owner of Jeff Green Partners, a Mill Valley, Calif.-based consulting firm.

Overall, tourists spend $1.8 billion a day, according to Shop America Alliance, an organization that represents 200 tourist-oriented shopping destinations across the United States. The most visited tenants at outlet centers in resort locations are apparel retailers. Those selling kitchen appliances, gifts and other knick-knacks also generate a lot of traffic. However, home furnishings don't sell well, according to Green, because they cannot be packed or shipped easily.

By clicking below, I acknowledge and agree to Penton's Terms of Service
and to Penton's use of my contact information to communicate with me about Penton's or its third-party
partners' products, services, events and research opportunities. Penton's use of the information I
provide will be consistent with Penton's Privacy Policy.

I acknowledge and agree to Penton's Terms of Service and to Penton's
use of my contact information to communicate with me about offerings by
Penton, its brands, affiliates and/or third-party partners, consistent
with Penton's Privacy Policy.*